In recent years, China's exports have greatly exceeded its imports, however this imbalance has been offset by the component of services. The article says, "At $122 billion in 2013, China's services deficit is by far the biggest in the world." Tourism is what is said to lie behind this gap, for the past five years, this gap in tourism has been growing larger and larger. Predictions have been made that China's surplus will narrow further.
Stephen Green, of Standard Chartered writes that "2014 is likely to be the year when China’s balance of payments re-emerges as a problem for the world." What do you predict? Will this continue to be a problem for China?
It is very interesting that China would simultaneously have such a surplus in its balance of trade and such a deficit in its balance of services. However, the likelihood of this becoming a serious problem for China seems remote. If we are noticing an issue, the Chinese most assuredly are. I would expect them to invest a lot of their time and energy into closing that gap in services and making them more self-sufficient so as to increase their surplus of trade.
ReplyDeleteThis is certainly not surprising. Ever since the reform by the government, more and more Chinese have been able to go abroad- most of them the very very wealthy. Chinese tourists now can be seen at almost every famous tourist location around the world, with large amounts of spending. With so much internal issues, I am uncertain as to how dire this issue is for the Chinese government to handle.
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